We really don't have any numbers or other info to start making a profile. Even moving a parameter of Apple's fraud responsibility from 10% to 50% to 100% if an iPhone is used illegally to make a purchase the interest by the financial institutions could vary greatly. In Apple's favour the sheer number of high profile financial institutions is impressive but I do wonder about Discover not bitting and that remaining 17% of banks. What was the issue there? With the 17% of banks they may not have tried with most of the others but with Discover I'm sure they were there right from the start even though they are the smaller of the 4 companies. Apple could even be doing this at a break even exchange to line some something better down the road, not unlike what they did with the iTunes [Music} Store or perhaps they also got transactions using their NFC system to remove nearly all transaction fees at Apple Store.
Discover announced, either yesterday, or this morning, that they are negotiating with Apple. Apple has the six biggest issuing banks, with 83% of the credit cards issued! and no doubt, the smaller banks will follow.
Obviously, Apple wasn't going to even bother with the small banks until they had this in hand, which they now do.
Paypal announced it will work with Apple pay, and Square just abandoned their own Wallet in favor Apple's. This is going to move everywhere. We can see just how many big institutions are already on board. That includes some of the biggest retailers and online stores. More will follow.
Obviously, terminals will be a problem. I mentioned this every time we've discussed this. There are some, in the industry, saying that Apple might either help pay for them, or advance cash for them, the way they do for their manufacturing partners. Apple has spent an enormous amount this quarter for startup costs, far more than ever before. I wonder if some of that is for terminals. I could see Apple spending a billion, or more, to get this started. Who else would do that?
Here's an analysis I mentioned the other day. In comments, I incorrectly stated that Apple wouldn't be able to use iWatch for this, in the first generation. Obviously, I was wrong about that.
Geez, because Apple is driving a hard bargain and Discover is actually a decent card that doesn't try to screw card holders. But the reality is that with AmEx and the rest in they can't afford to be left out. Hence the twitter message from Discover.
I use my discover card most for the cash back and bonuses but if it's easier to use my amex or rewards visa I'll do that instead. Discover can't afford me and a bunch of other iPhone owners doing that.
I'm not following. Are you saying that Discover has the upper hand here and won't sign on with Apple at this point unless Apple caves? :???:
Apple gets a portion of the fee and, in return, accepts some of the liability for fraud.
Because the security is good, fraud should be quite low. Hopefully zero.
I, too, suspect Apple is so confident they have put their money where their mouth is by accepting substantial liability with ?Pay, but we can't know for sure.
But what this does is create a competitive weapon against Samsung which so far doesn't have a decent fingerprint reader of secure enclave. If Samsung wants to copy this then they will have to do a much better job than they've done so far. Even then it will take time. Or Samsung could copy the deal Apple has with the banks - and accept the liability for fraud. And that could be expensive. Very expensive.
Even if Samsung creates a system as good (or better) than Apple's end-to-end NFC-based solution Highly doubt that Samsung or anyone else will get as good a deal as Apple at this point. This is an area where I believe being first to create the end-to-end solution is likely to yield the most reward.
With regard to possible use in Europe - this uses NFC so the NFC-enabled terminals should be OK. Maybe a firmware update. The issue will be having the software at the banks and CC processors able to handle the new token transactions (not the same as currently used, I believe). I expect that they will do it but Apple might go slow on the rollout to make sure that stuff works properly in volume.
I think that's just back-end updates that are needed to verify the localized token creation and pin (probably as a single hash value) with your account not the back end. I think the NFC terminals will simply pass the data to the merchant to the payment center as it has always done. If there is a hiccup I'd think it will be with financial institutions outside the US that may only operate in countries where the iPhone isn't heavily utilized to make it worthwhile for them to expense the back-end updates needed.
I am not sure about that- banks are not ones to let terms be dictated to them.
That's what people said about mobile networks while apple practiced exclusive iPhone cariers till the competing carriers pride crumbled like melting icedurgs
Apple gets a portion of the fee and, in return, accepts some of the liability for fraud.
Because the security is good, fraud should be quite low. Hopefully zero.
But what this does is create a competitive weapon against Samsung which so far doesn't have a decent fingerprint reader of secure enclave. If Samsung wants to copy this then they will have to do a much better job than they've done so far. Even then it will take time. Or Samsung could copy the deal Apple has with the banks - and accept the liability for fraud. And that could be expensive. Very expensive.
With regard to possible use in Europe - this uses NFC so the NFC-enabled terminals should be OK. Maybe a firmware update. The issue will be having the software at the banks and CC processors able to handle the new token transactions (not the same as currently used, I believe). I expect that they will do it but Apple might go slow on the rollout to make sure that stuff works properly in volume.
Not quite. It's been pointed out in a couple of financial articles that, as usual, the credit card companies will be responsible for fraud charges.
Obviously, terminals will be a problem. I mentioned this every time we've discussed this. There are some, in the industry, saying that Apple might either help pay for them, or advance cash for them, the way they do for their manufacturing partners. Apple has spent an enormous amount this quarter for startup costs, far more than ever before. I wonder if some of that is for terminals. I could see Apple spending a billion, or more, to get this started. Who else would do that?
I don't Apple has to. With the additional security and increased transaction rate I think it would be easy to convince most retailers that it's in their financial interest to get as many people using ?Pay as possible.
You can't blame Apple for lack of distribution of something such as iTunes Radio. Apple had this same problem with everything they do worldwide. They need to negotiate with every entity in every country they enter. It takes years. You might remember that Apple was almost sued by the EU for having different prices in every web store in each country in the EU. But when Apple showed them that it was the licensing authorities in each country that forced that, the EU backed down, and blamed the individual countries for violating the EU rules over that. Still, the EU can't seem to enforce their own laws and rules in the various countries that make it up.
So Apple needs to negotiate everywhere it goes. They can't negotiate everywhere at once. So they pick their fights in the order in which it makes sense for the company.
The same thing will happen here. Start in the biggest, richest, individual market, which just happens to be their home market. Most every company starts in their home market, where the rules and laws are best known to them, and branch out from there. They've got to negotiate with the issuing banks in every country. Do you know how many banks that is? And then, the banking and credit laws differ everywhere. They need to account for that too. This is a very complex business that makes the iTunes difficulty seem minor—and that took years.
I happen to think the EU is going to eventually break up. Germany should definitely leave, for one thing. At least they have a functioning economy, but they are paying for the irresponsibility of the other countries.
If that were the case, yes. But it won't be one in a thousand customers. It will be, at first, one in fifteen, in the EU. One in five in Japan, and one in four in the USA. Those numbers will go up. iOS users have been shown to spend much more than other mobile users. That's with iOS devices, and in general. That makes up for lack of majority status.
Well, I could quote many messages, so I pick up this one and will try to answer to all.
Of course NFC is not secure. It does not require your PIN. So basically, everyone who has the card in hands can make a payment. That's why it is limited both in amount and in number of consecutive transactions.
Most of the insecureness of the card system is the visibility of the numbers, because you can pay on almost any website using these and these only. (In France, you can't pay with a French card using the mag strip, you have to enter your PIN, so owning the card without knowing the PIN is useless). But more and more, over here, we have a reinforced security system whereby any transaction you do over the Internet has to be confirmed by entering a unique code sent by SMS to your mobile. So you have to be in possession of both the card AND the mobile whose number you gave to your bank by the time you complete the transaction.
For example, when I buy a train ticket on the SNCF website (I know that ‘train ticket’ sounds thrillingly exotic to American ears ), either I have to go through this double-check system and the ticket is sent to me by postal service or I choose to use a dedicated ATM to obtain it, wherein I have to insert my card and enter my PIN so the operator is sure I'm the one that ordered the ticket.
Your figure of 1:15 seems optimistic to me. This will work only with iPhone 6+. I'm not sure, given the current economic slump, that many people will upgrade. You may retort, and you'd be right, that it will take at least a couple of years before reaching an agreement, if an agreement is reached. By that time, the iPhone 6+ owner's rate might be higher. But I, for example (though I don't pretend to be an epitome) am still clinging to my iPhone 4.
I don't Apple has to. With the additional security and increased transaction rate I think it would be easy to convince most retailers that it's in their financial interest to get as many people using ?Pay as possible.
It's a matter of cost. Apple stated in their presentation, that 220,000 locations will accept this in the beginning. That sounds like a lot. But it's also why Google Wallet failed. There are between 10-15 million retail locations in the USA alone. That makes the 220,000 seem like nothing at all.
How much will a terminal cost, and how many will a retail outfit need? When replacing terminals as an upgrade the retailer makes every so often, it will make sense to replace them with these. But otherwise, it's a big, unexpected, cost. I've read that terminals for this will be between $250 and $3,000. Which is it? If some terminals out there now can have readers plugged in, then costs will be at that low end. But if they need to be replaced entirely, then costs will be at the high end. Then there is the back office software and people needed, for larger companies.
Just so that you know, because this has been a source of confusion, there is no such thing as Apple Pay Technology. Apple Pay uses NFC to make payments, just as any other mobile card wallet. This means that any merchant that accepts NFC payments will accept Apple Pay, Google Wallet, Softcard, etc. The ones that Apple mentioned are retailers that have stated that they will be deploying NFC to all of their locations and not just a small handful. Both Walgreens and CVS accept NFC payments. I use both and use Google Wallet with them all of the time.
Oh I know Apple uses NFC, but to the consumer they're thinking Apple Pay is something special, hence why I said consumers that own iPhone 6/+ will gravitate toward retailers that accept Apple Pay (i.e. NFC).
I used Walgreens and CVS as an example because I didn't know CVS had NFC readers, but my other examples Staples vs OfficeMax, Petco vs Petsmart, McDs vs Burger King I believe that will still yield true until every retailer small and large accepts NFC payment.
Your figure of 1:15 seems optimistic to me. This will work only with iPhone 6+. I'm not sure, given the current economic slump, that many people will upgrade. You may retort, and you'd be right, that it will take at least a couple of years before reaching an agreement, if an agreement is reached. By that time, the iPhone 6+ owner's rate might be higher. But I, for example (though I don't pretend to be an epitome) am still clinging to my iPhone 4.
1) It's the iPhone 6 and iPhone 6 Plus.
2) Based on last year's iPhone purchases there will be a couple hundred million iPhones 6/6+ sold over the year. The only chance of markets that don't embrace are ones where the iPhone is not a dominant handset.
Perhaps, but there is a financial benefit for retailers that accept ?Pay which means at some point that tips into a situation that one could lose more money by not investing in NFC.
I happen to think the EU is going to eventually break up. Germany should definitely leave, for one thing. At least they have a functioning economy, but they are paying for the irresponsibility of the other countries.
Well, I don't really want to get into a political and economic war here, but Germany is directly responsible for many of the problems the EU is having. And it's interesting that every decision that Germany has made that has resulted in deeper recession everywhere else in the EU, has benefitted them. Everyone e who understands economics knows that when economic times are bad, you spend your way out of it, and you don't tell countries to tighten up, which just results in more recession. And spending does not increase inflation. That's been shown to be a red herring. Right now, Europe is in danger of deflation, which is far worse than inflation, because no one knows how to back out of that, whereas we do know how to back out of inflation.
I happen to think the EU is going to eventually break up. Germany should definitely leave, for one thing. At least they have a functioning economy, but they are paying for the irresponsibility of the other countries.
Uh. Sure. Germans have recently been forced to accept dents in their salaries to preserve their employments. That's what I call a functioning economy :P
The real question is the UK, especially if Scotland secedes in a week (and I am a huge YES supporter).
I happen to think the EU is going to eventually break up. Germany should definitely leave, for one thing. At least they have a functioning economy, but they are paying for the irresponsibility of the other countries.
Way off topic but... Germany( a relatively socialist country BTW) is 'benefiting' from the fiscal union. The other country's are currency tied by the Euro. If Germany left, the D-Mark would float relative to the them. Germany would lose on the float (other countrys would devalue their currency); with the euro, they cant do that. This is why the EU could fail though, any 'union' requires helping the so called 'irresponsible's' (the only way they could fail is if they are irresponsible, right?) and if Germany etc does not help, the EU could fail. But in the end, as else where in the world, these are Germany's customers, so they will help. Hang together or surely hang separately (that Ben guy was very wise)
Well, I don't really want to get into a political and economic war here, but Germany is directly responsible for many of the problems the EU is having. And it's interesting that every decision that Germany has made that has resulted in deeper recession everywhere else in the EU, has benefitted them. Everyone e who understands economics knows that when economic times are bad, you spend your way out of it, and you don't tell countries to tighten up, which just results in more recession. And spending does not increase inflation. That's been shown to be a red herring. Right now, Europe is in danger of deflation, which is far worse than inflation, because no one knows how to back out of that, whereas we do know how to back out of inflation.
When it comes to politics and economics we could not be more opposite (I cannot comprehend any defense of discredited Keynesian theories), but we have many agreements regarding tech and Apple.
Well, I could quote many messages, so I pick up this one and will try to answer to all.
Of course NFC is not secure. It does not require your PIN. So basically, everyone who has the card in hands can make a payment. That's why it is limited both in amount and in number of consecutive transactions.
Most of the insecureness of the card system is the visibility of the numbers, because you can pay on almost any website using these and these only. (In France, you can't pay with a French card using the mag strip, you have to enter your PIN, so owning the card without knowing the PIN is useless). But more and more, over here, we have a reinforced security system whereby any transaction you do over the Internet has to be confirmed by entering a unique code sent by SMS to your mobile. So you have to be in possession of both the card AND the mobile whose number you gave to your bank by the time you complete the transaction.
For example, when I buy a train ticket on the SNCF website (I know that ‘train ticket’ sounds thrillingly exotic to American ears ), either I have to go through this double-check system and the ticket is sent to me by postal service or I choose to use a dedicated ATM to obtain it, wherein I have to insert my card and enter my PIN so the operator is sure I'm the one that ordered the ticket.
Your figure of 1:15 seems optimistic to me. This will work only with iPhone 6+. I'm not sure, given the current economic slump, that many people will upgrade. You may retort, and you'd be right, that it will take at least a couple of years before reaching an agreement, if an agreement is reached. By that time, the iPhone 6+ owner's rate might be higher. But I, for example (though I don't pretend to be an epitome) am still clinging to my iPhone 4.
It will also work using the iWatch through the old iPhone 5, and 5S. But by the end of next year, we'll see a lot of iPhones sold that will use this directly. I believe my numbers are fairly close.
The way you have to do this now is why it's not popular. Yes, techies will use it as a matter of pride, but for most others, it's way too much of a pain. And as I mentioned, and you agree with, it's limited to small purchases, just a few times a day. Basically, it's almost useless.
If someone is going shopping, they want to actually buy things. And that often means hundreds of dollars, or pounds, or Euro's worth of things. ApplePay will allow this, as well as all of the little things that NFC allows now. So while NFC has not really been a success, this has the chance of becoming so.
2) Based on last year's iPhone purchases there will be a couple hundred million iPhones 6/6+ sold over the year. The only chance of markets that don't embrace are ones where the iPhone is not a dominant handset.
Perhaps, but there is a financial benefit for retailers that accept ?Pay which means at some point that tips into a situation that one could lose more money by not investing in NFC.
Yeah. Cook said that there were 200 million people who could already use this. Maybe we're wrong, and the iPhone 5S is usable.
Comments
Discover announced, either yesterday, or this morning, that they are negotiating with Apple. Apple has the six biggest issuing banks, with 83% of the credit cards issued! and no doubt, the smaller banks will follow.
Obviously, Apple wasn't going to even bother with the small banks until they had this in hand, which they now do.
Paypal announced it will work with Apple pay, and Square just abandoned their own Wallet in favor Apple's. This is going to move everywhere. We can see just how many big institutions are already on board. That includes some of the biggest retailers and online stores. More will follow.
Obviously, terminals will be a problem. I mentioned this every time we've discussed this. There are some, in the industry, saying that Apple might either help pay for them, or advance cash for them, the way they do for their manufacturing partners. Apple has spent an enormous amount this quarter for startup costs, far more than ever before. I wonder if some of that is for terminals. I could see Apple spending a billion, or more, to get this started. Who else would do that?
Here's an analysis I mentioned the other day. In comments, I incorrectly stated that Apple wouldn't be able to use iWatch for this, in the first generation. Obviously, I was wrong about that.
http://seekingalpha.com/article/2464485-analyzing-the-potential-benefit-of-an-apple-payment-ecosystem
Other companies, such as transaction processors, are supporting this as well. Here's one of the biggest:
http://www.tsys.com
I'm not following. Are you saying that Discover has the upper hand here and won't sign on with Apple at this point unless Apple caves? :???:
I, too, suspect Apple is so confident they have put their money where their mouth is by accepting substantial liability with ?Pay, but we can't know for sure.
Even if Samsung creates a system as good (or better) than Apple's end-to-end NFC-based solution Highly doubt that Samsung or anyone else will get as good a deal as Apple at this point. This is an area where I believe being first to create the end-to-end solution is likely to yield the most reward.
I think that's just back-end updates that are needed to verify the localized token creation and pin (probably as a single hash value) with your account not the back end. I think the NFC terminals will simply pass the data to the merchant to the payment center as it has always done. If there is a hiccup I'd think it will be with financial institutions outside the US that may only operate in countries where the iPhone isn't heavily utilized to make it worthwhile for them to expense the back-end updates needed.
Not quite. It's been pointed out in a couple of financial articles that, as usual, the credit card companies will be responsible for fraud charges.
I don't Apple has to. With the additional security and increased transaction rate I think it would be easy to convince most retailers that it's in their financial interest to get as many people using ?Pay as possible.
So we were both wrong earlier today! I am pleased it is a revenue stream.
Not quite. It's been pointed out in a couple of financial articles that, as usual, the credit card companies will be responsible for fraud charges.
I've seen reports (Bank Innovations, for one) that said that Apple would pick up some of the fraud liability. Not all, but some, as part of the deal.
Of course, the banks are ultimately on the hook for fraud. But the deal might include some contribution from Apple (hold back part of the fee).
But we don't know - either way could be right.
I happen to think the EU is going to eventually break up. Germany should definitely leave, for one thing. At least they have a functioning economy, but they are paying for the irresponsibility of the other countries.
If that were the case, yes. But it won't be one in a thousand customers. It will be, at first, one in fifteen, in the EU. One in five in Japan, and one in four in the USA. Those numbers will go up. iOS users have been shown to spend much more than other mobile users. That's with iOS devices, and in general. That makes up for lack of majority status.
Well, I could quote many messages, so I pick up this one and will try to answer to all.
Of course NFC is not secure. It does not require your PIN. So basically, everyone who has the card in hands can make a payment. That's why it is limited both in amount and in number of consecutive transactions.
Most of the insecureness of the card system is the visibility of the numbers, because you can pay on almost any website using these and these only. (In France, you can't pay with a French card using the mag strip, you have to enter your PIN, so owning the card without knowing the PIN is useless). But more and more, over here, we have a reinforced security system whereby any transaction you do over the Internet has to be confirmed by entering a unique code sent by SMS to your mobile. So you have to be in possession of both the card AND the mobile whose number you gave to your bank by the time you complete the transaction.
For example, when I buy a train ticket on the SNCF website (I know that ‘train ticket’ sounds thrillingly exotic to American ears
), either I have to go through this double-check system and the ticket is sent to me by postal service or I choose to use a dedicated ATM to obtain it, wherein I have to insert my card and enter my PIN so the operator is sure I'm the one that ordered the ticket.
Your figure of 1:15 seems optimistic to me. This will work only with iPhone 6+. I'm not sure, given the current economic slump, that many people will upgrade. You may retort, and you'd be right, that it will take at least a couple of years before reaching an agreement, if an agreement is reached. By that time, the iPhone 6+ owner's rate might be higher. But I, for example (though I don't pretend to be an epitome) am still clinging to my iPhone 4.
It's a matter of cost. Apple stated in their presentation, that 220,000 locations will accept this in the beginning. That sounds like a lot. But it's also why Google Wallet failed. There are between 10-15 million retail locations in the USA alone. That makes the 220,000 seem like nothing at all.
How much will a terminal cost, and how many will a retail outfit need? When replacing terminals as an upgrade the retailer makes every so often, it will make sense to replace them with these. But otherwise, it's a big, unexpected, cost. I've read that terminals for this will be between $250 and $3,000. Which is it? If some terminals out there now can have readers plugged in, then costs will be at that low end. But if they need to be replaced entirely, then costs will be at the high end. Then there is the back office software and people needed, for larger companies.
I can see Apple willing to help out here.
I've read the opposite. We'll see.
Just so that you know, because this has been a source of confusion, there is no such thing as Apple Pay Technology. Apple Pay uses NFC to make payments, just as any other mobile card wallet. This means that any merchant that accepts NFC payments will accept Apple Pay, Google Wallet, Softcard, etc. The ones that Apple mentioned are retailers that have stated that they will be deploying NFC to all of their locations and not just a small handful. Both Walgreens and CVS accept NFC payments. I use both and use Google Wallet with them all of the time.
Oh I know Apple uses NFC, but to the consumer they're thinking Apple Pay is something special, hence why I said consumers that own iPhone 6/+ will gravitate toward retailers that accept Apple Pay (i.e. NFC).
I used Walgreens and CVS as an example because I didn't know CVS had NFC readers, but my other examples Staples vs OfficeMax, Petco vs Petsmart, McDs vs Burger King I believe that will still yield true until every retailer small and large accepts NFC payment.
1) It's the iPhone 6 and iPhone 6 Plus.
2) Based on last year's iPhone purchases there will be a couple hundred million iPhones 6/6+ sold over the year. The only chance of markets that don't embrace are ones where the iPhone is not a dominant handset.
Perhaps, but there is a financial benefit for retailers that accept ?Pay which means at some point that tips into a situation that one could lose more money by not investing in NFC.
Well, I don't really want to get into a political and economic war here, but Germany is directly responsible for many of the problems the EU is having. And it's interesting that every decision that Germany has made that has resulted in deeper recession everywhere else in the EU, has benefitted them. Everyone e who understands economics knows that when economic times are bad, you spend your way out of it, and you don't tell countries to tighten up, which just results in more recession. And spending does not increase inflation. That's been shown to be a red herring. Right now, Europe is in danger of deflation, which is far worse than inflation, because no one knows how to back out of that, whereas we do know how to back out of inflation.
I happen to think the EU is going to eventually break up. Germany should definitely leave, for one thing. At least they have a functioning economy, but they are paying for the irresponsibility of the other countries.
Uh. Sure. Germans have recently been forced to accept dents in their salaries to preserve their employments. That's what I call a functioning economy :P
The real question is the UK, especially if Scotland secedes in a week (and I am a huge YES supporter).
I happen to think the EU is going to eventually break up. Germany should definitely leave, for one thing. At least they have a functioning economy, but they are paying for the irresponsibility of the other countries.
Way off topic but... Germany( a relatively socialist country BTW) is 'benefiting' from the fiscal union. The other country's are currency tied by the Euro. If Germany left, the D-Mark would float relative to the them. Germany would lose on the float (other countrys would devalue their currency); with the euro, they cant do that. This is why the EU could fail though, any 'union' requires helping the so called 'irresponsible's' (the only way they could fail is if they are irresponsible, right?) and if Germany etc does not help, the EU could fail. But in the end, as else where in the world, these are Germany's customers, so they will help. Hang together or surely hang separately (that Ben guy was very wise)
When it comes to politics and economics we could not be more opposite (I cannot comprehend any defense of discredited Keynesian theories), but we have many agreements regarding tech and Apple.
It will also work using the iWatch through the old iPhone 5, and 5S. But by the end of next year, we'll see a lot of iPhones sold that will use this directly. I believe my numbers are fairly close.
The way you have to do this now is why it's not popular. Yes, techies will use it as a matter of pride, but for most others, it's way too much of a pain. And as I mentioned, and you agree with, it's limited to small purchases, just a few times a day. Basically, it's almost useless.
If someone is going shopping, they want to actually buy things. And that often means hundreds of dollars, or pounds, or Euro's worth of things. ApplePay will allow this, as well as all of the little things that NFC allows now. So while NFC has not really been a success, this has the chance of becoming so.
Yeah. Cook said that there were 200 million people who could already use this. Maybe we're wrong, and the iPhone 5S is usable.
Does the 5S contain this so-called Secure Element? Without that Apple Pay will not work.